Grading Firm Sued For Pushing Classic Games Market Into The Millions

Retro game grading service Wata Games is facing a class-action lawsuit that alleges it colluded with auction house Heritage Auctions to artificially inflate the value of the retro games market in order to benefit their own businesses.

Court documents obtained by VGC show the suit was filed in California's central district court. The suit is a class-action, which if successful, could include over 10,000 individuals that have used Wata's services over the past year.

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The suit alleges Wata and Heritage engaged in "unfair business practices," made "false statements," and performed "affirmative acts to manipulate the retro video game market." Prices of retro games surged over the course of the pandemic, with the suit blaming Wata and Heritage for pushing prices for high-demand titles from the hundreds of thousands into the millions of dollars.

Wata Games began operating in 2018 as a grading service for retro games. Just as grading services operate for collectible trading cards, Wata assigns a grade out of 10 for a game's quality. The suit notes that before Wata the record price for a retro game sold at auction was just over $30,000 for a copy of Super Mario Bros. sold in 2017. After Wata, the record leapt to over $100,000 after another copy graded by Wata sold in 2019.

The suit states that Wata president and CEO Deniz Kahn and Heritage co-founder Jim Halperin then issued press releases and interviews designed to hype the market. One such instance occurred in 2019 when Kahn appeared on an episode of Pawn Stars where he discussed the Super Mario Bros. game that sold for $100,000. However, as the lawsuit notes, Kahn never provided the previous selling price and instead estimated the game's value at $300,000. The owner of the game, Richard Lecce, whom Kahn knew personally but didn't acknowledge in the show, was asking for $1 million.

In 2020, a copy of Super Mario Bros Wata rated a 9.4 sold for $114,000, while a copy of Super Mario Bros. 3 sold for $156,000. Then in 2021, a sealed copy of Super Mario 64 sold for $1.56 million, followed by a record-setting auction of Super Mario Bros. which sold at $2 million. All the while, Wata and Heritage were taking a percentage of every game graded or auctioned off.

Conflicts of interest are also noted in the suit, with Halperin listed as an advisor to Wata's grading service. Wata co-founder Mark Haspel was also accused of selling his own graded games in violation of Wata's own policies.

Meanwhile, Wata's business became backlogged as gamers all wanted their old games graded in order to cash-in on the retro gaming boom. Wata advertised a turnaround time in weeks when in actuality it could take months for Wata to grade a game, according to the suit.

Wata has previously denied allegations of collusion and market manipulation.

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